Seems like every discussion about proposed development in Newton, somebody inveighs against greedy developers. Specifically, somebody inevitably suggests that denying the developer a profit should be a primary reason for supporting or not supporting a proposal.
I want to suggest that developer profit should not be a primary consideration. I want to propose three questions that we should ask first.
Q1: Do you want more homes in Newton?
Q2: If the answer to Q1 is yes, do you want to create new homes only for those who qualify for subsidies?
Q3: If the answer to Q2 is no, how much more market-rate housing do you want, of what type, and where?
And, I want to recommend a productive way to think about the developer role in our land-use discussions: The more predictable our land-use is, the more the potential value of a property accrues to the current owner of the property, not a speculative developer. So, make fewer redevelopment decisions by special permit.
To kick things off, many (most? nearly all?) of us living in market-rate (not subsidized) housing live in homes that were built by for-profit developers. I’m not a local historian, but as I understand the history of my neighborhood, many of our well-loved homes were built by a single builder hoping to make a buck in the 1920’s. Essentially all of Oak Hill Park was built by a single developer after WWII, whose profits were enabled by the GI bill. Nearly all the homes on Truman Rd.*, off Parker St. south of Route 9, were originally Capes and ranches built in the early 1950’s, presumably by a single developer. I’m sure there are myriad other examples across Newton. The point is that the Newton we enjoy — again, regardless of our positions on the housing debate — is largely a product of developers building and expanding homes across the city.
Which is not to valorize developers, but to note that developers are responsible for the Newton we have and might be useful in creating the Newton we want. But, first, we have have to figure out what our goals are for housing. Then, we can figure out what constraints we want to put place on developers to achieve those goals.
Let’s take a look at some expressions of anti-developer and pro-developer sentiment, see what they mean, and see if it’s possible to translate that into a more productive discussion on the future of housing in Newton.
There are three common expressions of anti-developer sentiment.
Subsidized housing only
Some folks who criticize market-rate housing in Newton say that they would be fine with not-for-profit developers or the city, state, or federal government building housing. Being anti-developer, in this case, is just a different way of saying that they want the the city to add only subsidized housing to our existing stock. No new market-rate homes.
No teardowns
Other folks want to limit the ability of developers to teardown existing, typically modest homes and replace them with McMansions or McMiniums (c). I think that’s just a different way of saying that one wants to preserve the size and scale of existing homes in the city. (Some believe that this will also help maintain those existing homes as attainable, but that’s complicated and the subject of a future post.)
By-right only
And, some folks say that they are fine with developers building new homes by-right, but that granting special permits for additional units serves no other purpose than to increase developer profit. Another version of this plays out in multi-home projects where developer greed is an argument for allowing fewer homes than the proponent proposes. This is basically a small-growth policy with developer greed a justification for limiting the scope of projects. We see this on projects ranging from the four-home proposal at 145 Warren St. to the biggest developments, like Northland on Needham St. and the Riverside Station project.
Interestingly, there is some, but not complete overlap among those the three views. We see on the City Council some councilors who want only subsidized new housing, some who want to limit teardown, and some who generally want to reduce the number of homes in any given proposal. There are a few who appear to want as little new market-rate housing as possible, but don’t feel the need to constrain redevelopment that doesn’t add net new homes. These folks appear to be fine with Newton homes getting larger, even if it’s developers building the new, larger homes and making a profit.
Viewed through the anti-developer lens, supporters of new market-rate homes — such as your humble scribe — are often characterized as simply or principally enabling developer greed and profits. It’s important to understand that some of us housing advocates think there is not enough housing choice in Newton across the income spectrum, not just for those qualifying for subsidized housing. And, the problem is just getting worse as our essentially fixed stock of single-family homes gets increasing expensive. Our answer is that developers are the mechanism by which market-rate housing — and much subsidized housing — is built.
That’s the key. If we are going to have new market-rate housing in Newton, either net new or replacement, it’s going to be developers who build it. And, there is almost certainly no way the city can directly cap profit. But, we can decide if we want new market-rate housing. And, we can decide what kind of housing we want built. So, let’s have that discussion. Before the perhaps not-so-useful arguments about developers.
Let’s start with net new housing. Where do you stand?
Q1: Do you want more homes in Newton?
Q2: If the answer to Q1 is yes, do you want to create new homes only for those who qualify for subsidies?
If the answer to either Q1 or Q2 is yes, you want to effectively eliminate the opportunity available to for-profit developers to create net new homes. But, not because developers are bad, but because your vision for Newton does not include adding market-rate housing.
Beyond a strict moratorium on new market-rate housing, it gets a little more nuanced, but not by much. The developer still doesn’t matter.
Q3: If the answer to Q2 is no, how much more market-rate housing do you want, of what type, and where?
Whether it’s on Warren St., in Newtonville, or at Riverside Station, we should determine what kind of housing we want, not what kind of housing will or will not generate a developer profit. If you want, like I do, significantly more market-rate homes with a wider variety of types and sizes, it’s going to be developers who build them. More or fewer new homes. Larger or smaller units. Developers are going to build them. And, the developer profit is one-time event. But, the fruits of the developer’s investment will last for decades.
If you’re still concerned about developer profit, there’s a way to constrain the opportunity to speculate, at least a little: make it super clear what can be built where.
There is no question that a property increases in value the moment it becomes possible to build more or larger housing. Every instance of a rezoned lot or lots, every special permit granted is a wealth-creation event. It’s at least partially a wealth-creation event for the property owner at the time additional rights are granted. If we make that wealth-creation event depend on lot-specific decisions, the property owner who benefits from the wealth-creation event is likely going to be a developer. If we make the wealth-creation a broader zoning decision, the wealth-creation event benefits the folks who own the property at the time of the rezoning.
To illustrate, let’s take at 145 Warren St. The property is a half-acre lot with a single home, zoned two-family by right, with opportunity for more homes by special permit. At the time the developer bought the home, the value of the opportunity included the certainty of being able to build at least one more home on the property plus the discounted possibility of building more, the discount based on the perceived likelihood that the City Council would grant a special permit for more homes. Any decent real estate agent would counsel the homeowner to factor that opportunity into the asking price. And, developers would bid against each other based on the opportunity. So, much of the opportunity would result in more money for the homeowner. If you doubt that homeowners are getting some of the benefit of their homes being torn down and replaced with McMansions or McMiniums, take a look at how big a premium that small homes on large lots are getting.
Back to 145 Warren St., because it’s the developer taking the risk that the City Council would deny the permit, the developer reaps more of the value of development. If the right to build three, four, or more homes had been available by right, more of the benefit of the redevelopment opportunity would have flowed to the previous homeowner.
If you want to limit a developer’s profit opportunity and shift it to the homeowner, then, I humbly suggest, decide what kind of development makes sense and make that development possible by right, as part of zoning redesign. To figure out where you stand on housing and zoning redesign, answer the three questions.
* A very interesting street to examine the impact of Newton’s current zoning.
Sean: To substantially approach the proposed discussion in fairness, you would have needed to pose at least scenarios if not answers so to exercise at least three variables:
1* what should be the census population (and demographics) of people maintaining a primary residence in Newton and what is the mix or distribution of types of households in which those individuals are expected to live. Household types shall include, but not be limited to: Singles, DINKs, 2 spouse + 1.8 children, 2 spouse + 4.2 children, empty nesters, seniors
2* what should be the population density of the housing stock in each of the wards comprising the City. To what extent does the designed-for density differ from the current measure of density, in each ward. What additions to housing capacity of which types (e.g., free standing single family, common wall row, condominium, multi-dwelling unit for rent). what does that imply for where, the plan being discussed, requires resources (e.g., land, equity, financing), how much and when. how much construction labor and equipment does that imply and what (if anything) will be required to ensure its availability.
3* what support for non-housing institutions will be required to ensure the continuity of Newton ‘s values and priorities as a living community, in light of the forecasted changes in the population caused or accentuated by the plan being advanced.
Cannot answer the questions? Cannot pose planning scenarios for exercising those dimensions as variables? Cannot quantify the topics and scenarios so to add definition to discussion of topics for which natural language, especially English, is inarticulate and, as a result of its lack of clarity and specificity, gives rise more to confusion than clarity?
What does that tell you about continued attempts to provoke blog-based discussion?
you are missing one important question:
Question: If the answer to Q2 is no, would you be ok for your own home to depreciate in value at least 20% when supply is increased dramatically to reach housing goals
Lets be honest, that’s what will happen because you would need to build tens of thousands of new units before prices come down
Do you want more homes in Newton?
No.
That was easy.
Where is the discussion on transportation? I support more homes, but not more cars, in Newton. Unfortunately even “transit-oriented” developments add at least 1 additional car per unit to the city.
Show me that developers are going to give (enough) money to electrify the commuter rail— not possible you say? Well then, don’t let them build until they make that happen.
I like the idea of talking about goals. However, the goal wrapped in the question “Do you want more homes in Newton?” is not really an end goal of even a convincing one for most people. Housing is a really more of a mechanism towards other goals that more people may care about.
Here are some goals or desires from different viewpoints that are correlated with development or housing that I can think of quickly. I’m sure people can think up more.
“I want vibrant, robust village centers and neighborhood businesses supported by people who can easily walk and bike there. I like shopping locally, and even if I have to drive to a business I prefer a short local trip rather than a longer regional one. But right now, local businesses don’t meet all my shopping or dining needs.”
“Generations of Newton residents have been able to live near each other. That’s not possible now: it’s not just that homes aren’t affordable, it’s that they don’t exist. Young people who move out can’t live near their parents, and older people can’t downsize without moving out of Newton. We should fix that.”
“Seniors on a fixed income have made a long-term investment in their homes and in the city. They deserve to maximize the profit of that investment when they leave.”
“I think Newton should be an example of a forward looking city, mixing varied and high quality housing stock, high efficiency homes that cost little to maintain and tread lightly in the planet, and an effective transportation policy that gives people more choices and actively works to minimize congestion.”
“Newton benefits from diversity of all kinds, including socioeconomic diversity. It should be more affordable for people and families with a wider range of incomes to live here.”
“Newton’s green spaces and recreational facilities are important public and private amenities and should be preserved and expanded.”
“I want to keep my taxes low.”
Yes, I want more housing in Newton. But I want more public/private partnerships to ensure different options for people of varying income. I want more rules on what can replace a teardown. (i.e. a rundown cape) It sucks when a small single family is torn down and replaced with an oversized two family home with the units being over 3000 sq feet.
Build up the village centers while leaving some of the cool old buildings. Austin Street works well and actually did ok on some affordable housing. West Newton could use something like that. (With one of those little Targets in it, please!)
I want more housing in Newton…if the infrastructure is built up to support the density BEFORE breaking ground, and that other communities are doing their FAIR SHARE to increase regional housing as well.
The past does equal the present; nor does it dictate the future in absolution, but I’ll meet the author’s progressive manifesto halfway….Austin Street and Trio are done and housing prices generally remain unchanged if not increased (and reducing the ratio of homeownership, BTW…) Let’s see if Northland and Riverside makes a dent in pricing before we go build crazy.
PS While the author defends a developer’s right to profit, what about homeowners? Anyone planning on or wish to sell for less? If so, lemme know and how much!?! Maybe I’ll start a second career as a flipper?
Matt, good call on the infrastructure. Schools and public transit – esp if we are promoting these buildings as transit oriented.
@ Sean, you continue your unhealthy obsession with 145 Warren Street which I will address in good time but here I am offering thoughts directly to MMQC to as usual, I mostly agree with.
But as a preface, I have to say that labels of pro-development and anti-development are completely inaccurate. Many of us are completely supportive of building more affordable housing. We just don’t agree with the approach that has the developers take the lead and throwing in a few crumbs of affordable units.
Minimally, I think we need public/private partnerships, but I am beginning to wonder if even that is the answer. I ran across this very interesting article about how another small city, Ann Arbor MI, is approaching the affordable housing needs.
While Ann Arbor (pop 117,000)is a bit larger than Newton (pop 88,000), it is a reasonable benchmark. Both are are extremely progressive small cities with highly educated residents. Some other comparisons to keep in mind.
Newton is Whiter (77% to 71%), less Asian (15% to 17%), less Black (3.5% to 7%). Newton also have less land area and higher density (17.8 sq. miles/4933.9@sq mile to 27.9 sq. feet/[email protected]).
Ann Arbor is identifying city own property, with seemingly a high focus on parking lots. While they are partnering with a design firm to get some options to present to the residents, they don’t appear to be partnering with private developers but rather developing it themselves with 100% being affordable. I am much more confident that this approach would be way more effective at creating much more affordable housing stock, Below is the link to the article and my source for my statistics
Here is the link
https://www.mlive.com/news/ann-arbor/2021/04/ann-arbor-sets-sights-on-developing-affordable-housing-at-three-more-locations.html
Sean
Offtopic, i think you’d find this interesting. House Deeds used to literally restrict ownership to certain races.
“Is There Racism in the Deed to Your Home?”
http://www.nytimes.com/2021/08/17/realestate/racism-home-deeds.amp.html
MaryLee, that’s a very interesting piece on Ann Arbor. Thank you for sharing it. I think Newton should consider a similar approach for some of our public parking lots.
My goal for development is that it doesn’t cause more flooding.
https://twitter.com/NewtonFireDept/status/1428402115676983304?s=20
I forgot my other goal for development. Not too many more rats.
https://patch.com/massachusetts/newton/newton-mayoral-candidate-amy-sangiolo-speaks-out-rat-problem